We can be rather sloppy when opening bank accounts. We may know that someone else is “on” an account with us but we are not entirely clear what that means. Your bank account’s signature card is important. Knowing who is on your signature card can make a real difference.
When only you are “on” your bank account signature card
If no one else is “on” the account, things are simple. The account can be accessed by us or by an agent under our Durable Power of Attorney. When we die, it passes to our estate.
When your spouse is “on” your bank account signature card
In Texas, we might have a convenience signer, whom we can deny access by writing to the bank. If the bank does not know that we have died, that convenience signer can withdraw the funds. Otherwise, they pass to our estate. In practice, few banks in Texas offer these accounts.
Someone could be “on” the account using “or” as in “Spouse 1 OR Spouse 2.” Although each has full access to the account, each owns the amount which they have contributed and that percentage passes to their estate. A variation on this incorporates a right of survivorship: all the funds passes to the survivor. Another variation combines this with a pay on death account. The people named need not be people who contributed to the account or had the right to withdraw money during the account holders’ lives. A couple might hold such an account “Spouse 1 OR Spouse 2” WROS/POD so that the money would pass first to the surviving spouse and then to their children.
Check the signature card at your bank.
Who really owns the account?
Who can sign?
Who can withdraw money?
Who gets it when you are gone?
More resources:
When you are gone, do you know what your family will need? What will your family need when you die?
Joint with right of survivorship may not be best approach in some situations. When shouldn’t you hold things jointly?
Estate planning attorney, Terry Garrett, is a member of the National Academy of Elder Law Attorneys and is active in the Texas and Austin Bar Associations. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.
She assists families of people with special needs, people planning for the retirement years and people administering estates.
